MUMBAI: Orphan policyholders would soon have respite as far as assignment of a new agent is concerned because the Life Insurance Council, a self-regulatory organisation of life insurance players in the country, plans to take up the issue strongly at the Insurance Act level.
If the plans of the council are anything to go by, an agent who wishes to acquire the existing business of another agent that has terminated his service, would have pay a price to service the old clients. These rates would be administered on the basis of number of clients that a terminated agent is passing on to the new agent.
The newly appointed agent would in turn earn a commission for servicing the ongoing policies and on any new policy that he cracks in.
Currently, shifting the client base of an existing agent to another one is not mandated by the Insurance Act, 1938, that governs the insurance industry in the country.
“Law must enable shifting of clients to another agent, particularly because there are a large number of agents working as part-time agents,” said S V Mony, who is the secretary of the council that has been working as .
Mony pointed out that the provision, which would help control the menace of orphan policyholders, was proposed in a draft recommendation four years ago. But, the draft was never taken up, he said, adding, the council would push to make shifting of clients legally binding.
“The commission structure should be prepared so as to make it remunerative enough for the new agent to service these orphaned policyholders,” Mony said.
Hordes of life insurance takers are left orphaned each year because the agent is either terminated for inefficiency or changes profession. Sources say, at least 1 lakh insurance agents of a life insurance behemoth in the country are terminated and an equal number hired every year.